Government celebrates inflation instead of acting against it

By VenEconomy

What a terrible thing brazenness is! And it's even more terrible when it is those in government who act shamelessly, as happens in Venezuela. The Hugo Chavez administration is so shameless that, this Thursday, it celebrated the fact that, in May, inflation was 2.6%, exactly half the inflation for April, claiming this as an "achievement" of the revolution. But as it is facts not words that tell the true state of affairs, it turns out that the government has nothing to crow about.

The fact that inflation dropped to 2.6% in May from 5.2% in April is hardly representative if account is taken of a number of circumstances in Venezuela and in the American Continent. One of those circumstances is that May's inflation is the highest rate of growth in prices in the past 12 months, with the exception of April, when inflation reached its highest level since February 2003 (5.2%).

Another fact is that annualized inflation continues its upward trend, going from 30.4% in April to 31.2% in May, according to the Nationwide Consumer Price Index (NCPI). The government's celebration is even more brazen if inflation in Venezuela is compared to that being experienced by neighboring countries.

Colombia, for example, has a rate of inflation for the year to date of 2.35% versus Venezuela's 14.2%; and in May, Colombia's inflation was merely 0.1% vs. 2.6% in Venezuela. But if we compare Venezuela's inflation with inflation in countries that are allies of the regime, Venezuela does very badly. In Ecuador, inflation so far this year comes to 1.88% and in May it was 0.02%, while in Bolivia cumulative inflation is a mere 0.29% and in May it was -0.02%, in other words prices came down.

Given this situation, what the Chavista government should be showing is a firm commitment to correcting its misguided anti-private-enterprise and anti-private-investment policies. It has been these policies, and nothing else, that have led to the increase in prices that is eroding Venezuelans' wages and salaries.

Instead of boasting about achievements that are no such thing, the government should be planning how to deal with the country's economic crisis at a time when the effects of suspending operations on the swap market for nearly a month are beginning to be felt, as this has put a brake on the imports that are needed to meet domestic demand, and when the 18 plus distribution companies that the government has seized from private businessmen are demonstrating the same level of failure as PDVAL, CEALCO, and Mercal, with the loss of more than 83,000 tonnes of basic food products as a result of managerial incompetence, indolence, and corruption.

After 11 years in office, Hugo Chavez will not be able to lay the blame for his failures anywhere else but at the door of his bad government.